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Thailand Daily
27 September 2018
Thailand Morning Cuppa
Top Story
Kasikornbank (KBANK TB, BUY, TP: THB240)
Ground Checks: Chat With Digital Executives; BUY
Company Update
Maintain BUY with GGM-based THB240 TP, offering 11% upside. We arranged a meeting with investors and the bank to discuss its
development and strategy to lead the digital banking platform. Given the impact from the online fee waiver and additional
investments, Kasikornbank’s CIR might remain at mid-40s for the next few years. We think CIR could be lower once the online
transactions become more popular. KBANK could leverage its large customer base to develop cross-selling products and reduce
potential overhead (branches, staff, physical network) to sustain growth and profitability.
Analyst : Tanadech Rungsrithananon +66 2088 9745
Kasikornbank : Ground Checks: Chat With Digital Executives; BUY (26 Sep 2018)
Kasikornbank : Briefing Notes: Back To Growth Mode; BUY (23 Jul 2018)
Other Story
PTT Exploration & Production (PTTEP TB, NEUTRAL,TP: THB145)
Bidding Awards Move Closer
Corporate News Flash
Maintain NEUTRAL with a new DCF-based THB145 TP from THB139, 6% downside. The bids for the Bongkot and Erawan
concessions are inching closer to the finish line, and PTT Exploration & Production and Chevron Thailand are competing for both.
From the current list of bidders, we believe there is a high chance the existing operators will win back their current fields. The bidding
timeline remains on schedule, with bid results expected in Dec 2018 and new production sharing contract signings in Feb 2019. We
believe PTTEP has a high chance of winning Bongkot and have already included such potential in our DCF valuation. However, as it
is now bidding for a 100% stake in Bongkot (our previous expectation: 66.67%), we revise our DCF valuation and TP. We also
maintain our recommendation, as the share price is trading near our TP.
Analyst: Kannika Siamwalla CFA +66 2088 9744
Today’s Report: PTT Exploration & Production : Bidding Awards Move Closer (26 Sep 2018)
Previous Report: PTT Exploration & Production : Hess’ Malaysian Assets Acquisition Could Be Positive (29 Aug 2018)
Economic Research
Auto Production Drags Down August MPI
Economics View
Thailand’s MPI eased in August to its slowest pace since Apr 2017, mainly on a decline in the manufacture of autos & parts.
The deceleration in industrial activity is expected to be temporary, as the sudden decline in autos dragged the headline figure
lower. Industrial and economic growth are expected to remain resilient, although slightly weaker in 2H.
We expect manufacturing activities to improve by 3.3% in 2018 (+1.6% in 2017), boosted by automotive (stronger external
demand), and electrical & electronics (E&E) manufacturing.
Economists: Peck Boon Soon +603 9280 2163, Aris Nazman Maslan +603 9280 2184
Today’s Report: Auto Production Drags Down August MPI (25 Sep 2018)
Previous Report: BoT Keeps It Steady As Economy Remains Resilient (19 Sep 2018)
See important disclosures at the end of this report
1Thailand Daily
27 September 2018
Chart 1: SET Intra-day graph Table 1: Key market indices (27 Sep 2018)
Index Chg % Chg % YTD
SET 1749.93 1.94 0.11% -0.2%
SET50 1155.61 -0.57 -0.05% 1.8%
SET100 2568.27 0.91 0.04% 1.0%
Dow Jones 26385.28 -106.93 -0.40% 6.7%
S&P500 2905.97 -9.59 -0.33% 8.7%
Nasdaq 7990.37 -17.11 -0.21% 15.7%
FTSE 7511.49 3.93 0.05% -2.3%
FSSTI 3239.10 3.02 0.09% -4.8%
Hang Seng 27816.87 317.48 1.15% -7.0%
Nikkei 24033.79 93.53 0.39% 5.6%
KLCI 1798.72 4.25 0.24% 0.1%
SHANGHAI SE 2806.81 25.68 0.92% -15.1%
JCI 5873.27 -1.03 -0.02% -7.6%
SET 2016 2017 2018F 2019F
PE (x) 16.71 16.90 16.26 14.79 Key Statistics
P/BV (x) 1.84 2.09 2.01 1.87 Foreign Exchange Rates / Oil Market
Yield (%) 3.16 2.80 3.00 3.26
SET Value by investor Type: Daily
USD Closed Chg. %Chg.
Buy Sell Net Baht (Onshore) 32.46 0.01 -0.03
(THBm) (THBm) (THBm) Yen 112.74 0.01 -0.01
Institution 4,126.81 4,756.71 -629.90
Proprietary 6,033.74 6,072.75 -39.01
Euro 1.18 0.00 0.12
Foreign 18,813.66 18,731.46 82.20 Oil Price (USD/barrel)
Retail 19,775.48 19,188.76 586.71 Brent 81.66 0.38 0.47
SET Value by investor Type
MTD YTD Nymex-Crude Light 72.17 0.60 0.84
(THBm) (THBm)
Institution 16,774.00 140,451.45
Proprietary 5,217.16 -6,987.00
Foreign -7,239.31 -208,356.69
Retail -14,751.86 74,892.25
SET50 Index Future
Long Short Net MTD YTD
Institution 31,283 31,300 -17 1,452 11,348
Foreign 110,626 121,883 -11,257 -33,064 -3,237
Local 78,075 66,801 11,274 31,612 -8,111
Foreign Fund Flows (USDm)
Daily WTD MTD YTD YoY
Thailand 2.5 11.0 -219.7 -6501.8 -6448.2
Note: *As at 26 Sep 2018 closing Note: *As at 26 Sep 2018 closing
Bulletins
Stock/Sector News Comment Rating
Property sector Finance Minister, Apisak Tantivorawong has Mid- to high-end developers focusing on OVERWEIGHT
rushed to dispel concerns that there is a local landed property such as Land and Houses
property bubble. Developers typically trim (LH TB, BUY, TP: THB12.80), SC Asset
supply if a bubble forms to prevent losses, (SC TB, NR), Golden Land (GOLD TB,
but they are continuing to introduce a large BUY, TP: THB12.80) and Quality Houses
amount of supply – this suggests that they (QH TB, SELL, TP: THB2.95) are less risky
believe demand will prevail, he said. His than mid- to low-end developers such as
comment came after the Bank of Thailand LPN Development (LPN TB, SELL, TP:
governor, Veerathai Santiprabhob warned of THB8.30) and Pruksa Holding (PSH TB,
a debt-fuelled bubble in the housing market, SELL, TP: THB18). Ananda (ANAN TB,
resulting from "search-for-yield behaviour", BUY, TP: THB6.30), AP Thailand (AP TB,
which prompted him to summon related BUY, TP: THB10.70) and Sansiri (SIRI TB,
parties to discuss controlling risks. In the TRADING BUY, TP: THB1.90), on the
meantime, Predee Daochai, chairman of the other hand, have high exposure to foreign
Thai Bankers' Association, said there is no buyers because they focus on developing
need to tighten criteria on housing loan condominiums along the mass transit in
approvals as it has not reached an alarming Bangkok’s inner city.
level, though higher risk is looming in some
residential segments and locations.
(Source: Bangkok Post)
See important disclosures at the end of this report
2Thailand Daily
27 September 2018
Charoen Pokphand CPF is eyeing a 10% yearly rise in chicken Domestic broiler prices show good signs of TRADING BUY;
PCL (CPF TB) sales. SET-listed CPF, an agro-industrial and rebounding after it closed at THB35 per kg TP: THB29.50
food conglomerate, wants to increase total in Aug 2018 (+10% MoM). Although the
revenue from its chicken business by 10% average sales price for CPF (CPF TB,
annually to reach THB50bn within three TRADING BUY, TP: THB 29.50) remains
years. Revenue from the chicken business is below last year’s average by 14%, we
valued at THB45bn now, including THB22bn expect the rebound to continue further. This
from chicken exports (60% of which are would mainly be supported by export
further-processed products and 40% are volumes after it received a certificate to
frozen products), and the rest from domestic export frozen meat and broiler by-products
consumption. Prasit Boondoungprasert, chief to China and Japan. Management’s target
operating officer for the chicken business and for its chicken business is in line with our
international trade, said revenue growth will expectations.
be driven by the company's overseas
operations as well as fresh and frozen
products, which will be processed further into
higher value-added products.
(Source: Bangkok Post)
See important disclosures at the end of this report
3Thailand Daily
27 September 2018
Top BUYs
TP Upside
Catalysts
(THB) (%)
• The largest network with 45 hospitals nationwide offering complete healthcare services
Bangkok Dusit
• Solid long-term growth given rooms for efficiency improvement, synergy of its hospital
Medical 29.00 13.73 network, complete healthcare service and influx of medical tourists
(BDMS TB)
• Superb 1Q18 earnings growth of 50% YoY with a good momentum into 2Q18
• Top pick for Thailand’s retailer to deliver the highest 2018 earnings growth (+35%)
• Favourable 3Q18F outlook; with a solid 3-4% SSSG for Big C Supercenter in July and
August, easing raw material cost for its glass packaging business, and the Government’s
budget spending on public health during the fiscal year-end that may strongly boost its
Berli Jucker healthcare equipment sales
73.00 23.21
(BJC TB)
• Improving upcountry consumption prior to and post- General Election may benefit both Big
C and consumer supply chain businesses
• Expect tax benefits from its subsidiaries to enhance its 2H18F net profit margin, as a near-
term catalyst
• Positive sentiments of Thailand’s domestic consumption recovery and CP All’s 7-Eleven
annual stamp redemption campaign in 2H18F
CP All • Expect its earnings to improve again in 4Q18F during the high season for retail, against a
88.00 25.71 low base YoY, and a smaller impact from Makro’s food price deflation
(CPALL TB)
• Remains attractive as a long-term investment despite of a short-term higher opex from
Makro’s overseas business expansion
• Earnings growth is expected to rebound to 8.1% in 2018 and increase to 10.6% in 2019
from a decline of 14.5% in 2017.
Kasikornbank • The ROE is trending up to 10.3-10.6% in 2018-2019 from the low level of 11.2% in 2017
240.00 12.68 given higher earnings growth prospects.
(KBANK TB)
• Balance sheet has been improving with stable NPL ratio and higher LLC ratio. This would
enable KBANK to lower future provisions to boost earnings growth
• One of the best-known brands for mid-range to high-end landed properties. The company is
also equipped with rental business and investment portfolio
Land & • 2018 guidance shows a double-digit presales growth, massive new launches and healthy
Houses 12.80 13.27 rental income business.
(LH TB) • Apart from upbeat residential business, other key highlights this year are i) a completion of
mixed use Terminal 21 Pattaya in 4Q18, ii) divestment of one apartment in the USA in
2Q18, and iii) development of another mixed use project on Sukhumvit 10
Mega Life • Tangible growth from under-penetrated developing markets
Sciences 44.00 19.73 • Growing range of branded products leading to widen margins
(MEGA TB) • Net cash position with healthy cash flow
• With our view of higher crude oil prices this year and next, PTT remains a good proxy to the
PTT crude oil market
59.00 8.76 • Expect strong core business and subsidiaries
(PTT TB)
• PTTOR’s listing is expected in 2Q19, with its asset spin-off to be completed by 2H18
• High chemical spreads to continue in 2H18 especially HDPE-Naphtha currently in the
middle stage of up-cycle.
Siam Cement
560.00 23.89 • A recovery of demand for cement and building materials expected to occur in FY19
(SCC TB)
especially after the general election time.
• P/E is undemanding at 9x and the dividend yield is attractive at 4.6% pa.
Taokaenoi • Rebounding margin from lower cost of raw material and tax exemption
Food & • Double capacity with net cash position
18.00 7.14
Marketing • Competitive advantage compare to global snack players (Higher ROE, ROA, NPM and
(TKN) earning outlook FY18-19)
• Premium-quality warehouse business deserving the stronger demand from high-technology
industries under EEC scheme.
WHA Corp • Stronger momentum of industrial land sale based on its diversified portfolio of industrial
4.83 13.92 estate locations.
(WHA TB)
• Consistent earnings growth expected for next 3 years and limited downside risk based on
high earnings contribution from utilities and power business.
See important disclosures at the end of this report
4Thailand Daily
27 September 2018
Recent Stories
To access the following reports, please click on the link:
RHB | Thailand Morning Cuppa – 26 September 2018
Kasikornbank : Ground Checks: Chat With Digital Executives; BUY
PTT Exploration & Production : Bidding Awards Move Closer
RHB | Thailand Morning Cuppa – 25 September 2018
Auto Production Drags Down August MPI
RHB | Thailand Morning Cuppa – 24 September 2018
Regional Oil & Gas : Algeria Meeting Key Message: Market’s Well Supplied
RHB | Thailand Morning Cuppa – 21 September 2018
Slower Growth Ahead Amid Rising Trade War
RHB | Thailand Morning Cuppa – 20 September 2018
Siam Global House: Rising Risk, TP Reached; TAKE PROFIT
RHB | Thailand Morning Cuppa – 19 September 2018
Healthcare & Hospitality: Ground Checks: More Collaboration Ahead
BoT Keeps It Steady As Economy Remains Resilient
RHB | Thailand Morning Cuppa – 18 September 2018
Regional Oil & Gas : Oil Producers Flex Muscles
RHB | Thailand Morning Cuppa – 17 September 2018
RHB | Thailand Morning Cuppa – 14 September 2018
RHB | Thailand Morning Cuppa – 13 September 2018
Central Pattana : A Good Deal To Strengthen Its Asset Portfolio
RHB | Thailand Morning Cuppa – 12 September 2018
Domestic Demand Takes The Wheel
RHB | Thailand Morning Cuppa – 11 September 2018
PTT : Disruptive Fear
RHB | Thailand Morning Cuppa – 10 September 2018
Banks : Thailand Focus: Fintech – Riding The Wave
RHB | Thailand Morning Cuppa – 7 September 2018
The Erawan Group: Towards a Promising Outlook; BUY
Integrated Oil & Gas : IMO Regulations: Windfall For Thai Refiners
RHB | Thailand Morning Cuppa – 6 September 2018
Industrial Estate : Thailand Focus 2018: Strengthening Linkage To EEC
RHB | Thailand Morning Cuppa – 5 September 2018
Strategy-Thailand: Bottom Out, Bottom Up
RHB | Thailand Morning Cuppa – 4 September 2018
Kiatnakin Bank: Strong Loan Growth, High Dividend Yield; BUY
RHB | Thailand Morning Cuppa – 3 September 2018
Loan Growth Strongest In Three Years
August CPI Ticks Up; Rate Hike Imminent
RHB | Thailand Morning Cuppa – 31 August 2018
RHB | Thailand Morning Cuppa – 30 August 2018
TISCO Financial Group : Growth, Loan Quality Improvements Ahead; BUY
Sansiri : 2018 Presales May Hit Historic High
Mega Lifesciences : Steady Growth Prospects
See important disclosures at the end of this report
5Thailand Daily
27 September 2018
Thailand Research Team
Kasamapon Hamnilrat Head of Research kasamapon.ha@rhbgroup.com +662 088-9739
Wanida Geisler Senior Vice President wanida.ge@rhbgroup.com +662 088-9748
Kannika Siamwalla, CFA Head of Regional Oil & Gas kannika.si@rhbgroup.com +662 088-9744
Chatree Srismaicharoen Senior Vice President chatree.sr@rhbgroup.com +662 088-9743
Tanadech Rungsrithananon Senior Vice President tanadech.ru@rhbgroup.com +662 088-9745
Saravut Tachochavalit Senior Vice President (Technical) saravut.ta@rhbgroup.com +662 088-9754
Vatcharut Vacharawongsith Senior Associate, Research vatcharut.va@rhbgroup.com +662 088-9736
Pakorn Khaoeian Senior Associate Research pakorn.kh@rhbgroup.com +662 088-9627
Paiboon Janesathit AVP Research paiboon.ja@rhbgroup.com +662 088-9628
Araya Prayoonsorn Associate Research araya.pr@rhbgroup.com +662 088-9999 ext.2030
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
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See important disclosures at the end of this report
6Thailand Daily
27 September 2018
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7Thailand Daily
27 September 2018
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such other registered U.S. broker-dealer as appointed by RHB from time to time as required by the Exchange Act Rule 15a-6. This report is confidential
and not intended for distribution to, or use by, persons other than the recipient and its employees, agents and advisors, as applicable. Additionally, where
research is distributed via Electronic Service Provider, the analysts whose names appear in this report are not registered or qualified as research
analysts in the United States and are not associated persons of Auerbach Grayson AG or such other registered U.S. broker-dealer as appointed by RHB
from time to time and therefore may not be subject to any applicable restrictions under Financial Industry Regulatory Authority (“FINRA”) rules on
communications with a subject company, public appearances and personal trading. Investing in any non-U.S. securities or related financial instruments
discussed in this research report may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations
of, the U.S. Securities and Exchange Commission. Information on non-U.S. securities or related financial instruments may be limited. Foreign companies
may not be subject to audit and reporting standards and regulatory requirements comparable to those in the United States. The financial instruments
discussed in this report may not be suitable for all investors. Transactions in foreign markets may be subject to regulations that differ from or offer less
protection than those in the United States.
OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST
Malaysia
RHB does not have qualified shareholding (1% or more) in the subject company (ies) covered in this report except for:
a) -
RHB and/or its subsidiaries are not liquidity providers or market makers for the subject company (ies) covered in this report except for:
a) -
RHB and/or its subsidiaries have not participated as a syndicate member in share offerings and/or bond issues in securities covered in this report in the
last 12 months except for:
a) -
RHB has not provided investment banking services to the company/companies covered in this report in the last 12 months except for:
a) -
Thailand
See important disclosures at the end of this report
8Thailand Daily
27 September 2018
RHB Securities (Thailand) PCL and/or its directors, officers, associates, connected parties and/or employees, may have, or have had, interests and/or
commitments in the securities in subject company(ies) mentioned in this report or any securities related thereto. Further, RHB Securities (Thailand) PCL
may have, or have had, business relationships with the subject company(ies) mentioned in this report. As a result, investors should exercise their own
judgment carefully before making any investment decisions.
Indonesia
PT RHB Sekuritas Indonesia is not affiliated with the subject company(ies) covered in this report both directly or indirectly as per the definitions of
affiliation above. Pursuant to the Capital Market Law (Law Number 8 Year 1995) and the supporting regulations thereof, what constitutes as affiliated
parties are as follows:
1. Familial relationship due to marriage or blood up to the second degree, both horizontally or vertically;
2. Affiliation between parties to the employees, Directors or Commissioners of the parties concerned;
3. Affiliation between 2 companies whereby one or more member of the Board of Directors or the Commissioners are the same;
4. Affiliation between the Company and the parties, both directly or indirectly, controlling or being controlled by the Company;
5. Affiliation between 2 companies which are controlled, directly or indirectly, by the same party; or
6. Affiliation between the Company and the main Shareholders.
PT RHB Sekuritas Indonesia is not an insider as defined in the Capital Market Law and the information contained in this report is not considered as
insider information prohibited by law. Insider means:
a. a commissioner, director or employee of an Issuer or Public Company;
b. a substantial shareholder of an Issuer or Public Company;
c. an individual, who because of his position or profession, or because of a business relationship with an Issuer or Public Company, has access to
inside information; and
d. an individual who within the last six months was a Person defined in letters a, b or c, above.
Singapore
RHB Research Institute Singapore Pte Ltd and/or its subsidiaries and/or associated companies do not make a market in any securities covered in this
report, except for:
(a) -
The staff of RHB Research Institute Singapore Pte Ltd and its subsidiaries and/or its associated companies do not serve on any board or trustee
positions of any issuer whose securities are covered in this report, except for:
(a) -
RHB Research Institute Singapore Pte Ltd and/or its subsidiaries and/or its associated companies do not have and have not within the last 12 months
had any corporate finance advisory relationship with the issuer of the securities covered in this report or any other relationship (including a shareholding
of 1% or more in the securities covered in this report) that may create a potential conflict of interest, except for:
(a) -
Hong Kong
The following disclosures relate to relationships between RHBHK and companies covered by Research Department of RHBSHK and referred to in this
research report:
RHBSHK hereby certifies that no part of RHBSHK analyst compensation was, is or will be, directly or indirectly, related to the specific recommendations
or views expressed in this research report.
RHBHK had an investment banking services client relationships during the past 12 months with: -.
RHBHK has received compensation for investment banking services, during the past 12 months from: -.
RHBHK managed/co-managed public offerings, in the past 12 months for: -.
On a principal basis. RHBHK has a position of over 1% market capitalization of: -.
Additionally, please note the following:
Ownership and material conflicts of interest: RHBSHK policy prohibits its analysts and associates reporting to analysts from owning securities of any
company covered by the analyst.
See important disclosures at the end of this report
9Thailand Daily
27 September 2018
Analyst as officer or director: RHBSHK policy prohibits its analysts, and associates reporting to analysts from serving as an officer, director, advisory
board member or employee of any company covered by the analyst.
RHBHK salespeople, traders, and other non-research professionals may provide oral or written market commentary or trading strategies to RHB clients
that reflect opinions that are contrary to the opinions expressed in this research report.
This research report is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be
illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of
individual clients. Clients should consider whether any advice or recommendation in this research report is suitable for their particular circumstances
and, if appropriate, seek professional advice, including tax advice.
Kuala Lumpur Hong Kong Singapore
RHB Research Institute Sdn Bhd RHB Securities Hong Kong Ltd. RHB Research Institute Singapore
Level 3A, Tower One, RHB Centre 12th Floor Pte Ltd.
Jalan Tun Razak World-Wide House 10 Collyer Quay
Kuala Lumpur 19 Des Voeux Road #09-08 Ocean Financial Centre
Malaysia Central, Hong Kong Singapore 049315
Tel : +(60) 3 9280 8888 Tel : +(852) 2525 1118 Tel : +(65) 6533 1818
Fax : +(60) 3 9200 2216 Fax : +(852) 2810 0908 Fax : +(65) 6532 6211
Jakarta Shanghai Bangkok
PT RHB Sekuritas Indonesia RHB (China) Investment Advisory Co. Ltd. RHB Securities (Thailand) PCL
Wisma Mulia, 20th Floor Suite 4005, CITIC Square 10th Floor, Sathorn Square Office Tower
Jl. Jenderal Gatot Subroto No. 42 1168 Nanjing West Road 98, North Sathorn Road, Silom
Jakarta 12710, Indonesia Shanghai 20041 Bangrak, Bangkok 10500
Tel : +(6221) 2783 0888 China Thailand
Fax : +(6221) 2783 0777 Tel : +(8621) 6288 9611 Tel: +(66) 2 088 9999
Fax : +(8621) 6288 9633 Fax : +(66) 2 088 9799
See important disclosures at the end of this report
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